Utilities launch green pricing, Seen as alternative to EFL

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Germany's second green pricing scheme -- under which electricity consumers will be offered power from renewable sources at a premium price -- has been introduced in the southern state of Baden Württemberg. The premium payments will be ploughed back into the renewables sector and used to finance the development of further green power plants.

Under the scheme, customers may now order at least 20 kWh a month from renewables at a premium of DEM 0.10/kWh. Additionally, a minimum of 5 kWh per month may be bought specifically from photovoltaic plant for a further surcharge of DEM 1.60/kWh. Customers must pledge to pay the higher rates for at least ten years, although they can cancel the contract if they give notice three months before their next annual electricity bill is due.

The scheme was introduced jointly in February by two utilities: Badenwerk of Karlsruhe and Energie-Versorgung-Schwaben (EVS) of Stuttgart. They will provide know-how in the use of renewables as well organise the planning, construction and operation of the necessary power plant and provide financing.

The two power companies, which are in the process of merging, are following the lead of Germany's largest utility, RWE Energie. It introduced a green pricing system in 1996 dubbed the "environment tariff" (Windpower Monthly, April 1996). RWE's system is more generous than the Badenwerk/EVS model. It offers green electricity at an "environment premium" of DEM 0.2/kWh, plus sales tax, for at least 100 kWh a year. It also ploughs the money raised through the premium back into development of renewables, also matching the sum raised by an equal amount. This money is used to support the installation of wind and photovoltaic plant. By the end of 1996, 8100 of RWE's customers had signed up for the scheme, including 12 industrial or large commercial entities. This represents 0.3% of all the utility's electricity customers. Despite this tiny proportion, EWE claims "a much stronger effect has been achieved with this initiative than all other renewables measures including the Electricity Feed Law."

Alternative to EFL

The more modest framework of the Badenwerk/EVS scheme is not because the utilities are less financially well-endowed than RWE, but because they believe customers should be made aware of the true cost of renewables. They also see their scheme as an alternative to the much disputed Electricity Feed Law (EFL), which obliges utilities to buy all renewable energy at a premium price set by government.

The emphasis at EVS and Badenwerk, which both vehemently oppose the EFL, is on giving the customer the choice of buying green power at extra cost. "It can't be the job of utilities to support the expansion of renewable energies or to build renewable plant on a large scale, or to distribute these costs across all power customers as a sort of obligatory surcharge," says Ernst Hagenmeyer, director of the board at EVS.

However, there is considerable social pressure on utilities to do more in the renewables sector. But the higher power prices which necessarily result can not be accepted by companies which are having to face up to ever fiercer competition, the two utilities stress. "We are building on experience gained in Switzerland and Holland where green power has been on offer for several years," says Hans Kuntzemüller, Hagenmyer's counterpart at Badenwerk. "In these countries there are already commercial customers, such as health food shops, who use their purchases of eco power as an advertising feature."

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